How Did We Get Into This Health Care Mess?

Many people would like the relationships in health care to follow a straightforward economic pattern. They imagine that the doctor-patient relationship should look like an Intro to Economics price to quantity graph, with physicians as suppliers and patients as demanders. If that were the case, simply adding more doctors could shift the supply curve and create a new equilibrium. They think that would produce a lower price for health care and resolve many of America’s health care concerns. The real world, however, is not quite like that.

The first, and most obvious, problem is that the physician supply has not kept up. That is one of the many reasons why the United States is being inundated with foreign-trained physicians. As another post showed, the number of U.S. physicians is inadequate for our country’s needs now. The most reliable resources indicate that there may be a shortfall of 150,000 by the year 2025. If the economics of health care followed the simple model described above, then the supply curve would shift in the undesired direction. In that case the price of health care would become even greater than the dollar figures mentioned in the current political debate.

But there is more. The demand for health care has increased much more than expected. A look at the Congressional Research Service’s demographic charts shows that there are many more older people in this country. The United States is in the midst of a profound demographic change, and has had an overall aging of its population; this has been characterized by the increased proportion of persons aged 65 and older in our population. In general, as people get older, they use more health care. The result may be a shift of both the supply and demand curves. Using that old economics diagram, the resulting equilibrium will be higher and much more costly.

However, some argue that physicians are more than just the suppliers of health care. Those people feel that physicians may be a part of the problem themselves and some physicians may stimulate overuse of the heath care system. In the recent past, President Barack Obama spoke to the American Medical Association about this issue, and implied that physician behavior may be one of the factors driving up costs. He suggested that some doctors create a demand for services, and their intervention has contributed to the problems of the health care market. The difficulty with that argument is in separating issues that relate to demand from the physician role as the gatekeeper to health care system. Physicians are often the means that patients use to initiate access the health care system. However, the health care demand exists in and of itself; it is an independent factor. All that physicians do is show they care for patients by responding to the existing demand.

If physicians are not the cause of the problem, is physician supply a factor of concern? It is important to be aware that some believe an increase in physician supply does not translate into better care. In fact, as counter-intuitive as it may seem, some recent reports indicate that patients’ satisfaction with care, and patients’ perceptions of access, are no better in high physician supply regions than in low physician supply regions. With that understanding, many argue that more physicians may not result in better care for patients. People who follow that argument believe that what we need is improved efficiency, not more doctors, to produce a more cost-effective result. (See: Skinner et al, “The Elusive Connection Between Health Care Spending and Quality.” Health Affairs 28, w119–w123, 2009.)

Could it be that what we need is both more doctors and more efficiency? In some countries with different health care systems, demographic predictions of this variety have resulted in significant changes in hospital design and physician education. The demographic details for our country present a pretty strong argument showing that there will not be enough physicians for your care when you get older. At the same time, every one could use more efficiency. How will the combined House and Senate bills respond to these issues?

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